VicSuper was established in 1994 as a Victorian Public Sector Fund. In July 2000, the Superannuation Fund became open to all eligible Australians. Today, VicSuper manages over AUD 23 billion of assets on behalf of 250,000 members as at July 1, 2019.
VicSuper believes responsible investment leads to better investment outcomes, as such it became a signatory to the UN PRI in 2006. The Super Fund applies a negative screen on Tobacco companies for all of its assets, and offers particular screens depending on investor's preference. Furthermore, ESG issues are incorporated throughout the investment process – from the security selection to corporate engagements and voting. The VicSuper has formalized a Climate Change strategy, which seeks to incorporate Climate Change into their Investment Governance Framework, investing in line with a just transition towards a low carbon economy, as well as engaging companies to improve their management of climate-related risk.
Engagement and Proxy Voting Policy
Institutional Investor: "Oh no,” the recruiter exclaimed over the phone during my job interview. Up until that moment, the conversation had progressed extremely well. I was about to be connected to the hiring manager at a financial data and technology firm. The tone changed in an instant, as if I’d mentioned interning for Bernie Madoff or demanded access to the corporate jet. But I’d said something worse: I have a disability.
Institutional Asset Manager: Like Switzerland, Germany is home to several banks that cater to the investment needs of wealthier clients. These wealth managers are referred to as ‘private banks’ in Germany, and one of the oldest is Bankhaus Metzler in Frankfurt. Founded in 1674 by textile dealer Benjamin Metzler, the private bank has remained family-owned ever since.
IPE: A public sector pension fund association has hosted an event to allow investors to hear from representatives of communities affected by mining company BHP’s operations in South America as it tries out a new approach to engagement.
Institutional Investor: Most venture capitalists say they want to invest in more women- and minority-owned businesses — but when they are presented with the opportunity, they often dismiss it as “not the right fit”.
Funds Europe: Environmental, social and governance (ESG) criteria are of increasing importance to the decision-making process when looking to invest in real assets. As demand for real assets continues to grow against a backdrop of ongoing macro and political concerns, 90% of institutional investors said ESG was an important factor.
The Wall Street Journal: A U.K. regulator launched a new code for asset owners and managers, asking them to consider environmental, social and governance factors at companies they are investing in. The Financial Reporting Council’s new stewardship code forces participating pension funds, insurance firms, fund managers and other service providers to show how they protect and enhance the value of their investments for the long term. It replaces an existing code from 2012.
Citywire: Asset allocators have been bringing up the circular economy investment theme for a while. However, fund management firms only started implementing it in a fund format recently.
Citywire: The notion that poor performers on ESG should be excluded from portfolios is well known, but should investors go further and actively short such stocks to further punish problematic players?
Morningstar Australia: The Bank of England will be the first central bank in the world to stress test its financial system against different climate pathways, while Australia’s financial regulator has no immediate plans to introduce stress-testing despite the mounting effects of climate change.
The Trust Waikato was established in 1988 by the Government of New Zealand to hold and manage the shares of Trust Bank Waikato – a trustee bank to increase community access to banking services. In 1996, Trust Waikato left banking and sold their shares. The proceeds from the sale were invested, using a portion of the profits to provide grants to community groups and projects in the Waikato region. As at March 31, 2018, the organization had US$ 269 million of assets under management.
The Trust believes it has a responsibility to consider the positive and negative externalities of its investments on the Environment and Society. As such, the Trust became a signatory to the UN PRI in February 2007. The Trust Waikato invests solely through external managers. For direct mandates, it has implemented a screening criteria on armaments, tobacco, gambling and liquor. When selecting and monitoring managers, the Trust researches their capacity to consider environmental, social and governance issues throughout the investment process.
Statement of Responsible Investment
CNBC: Share prices for U.S. water utilities are on the rise as investors inject more money into socially responsible companies. While most utility shares are outperforming the markets, water utility stocks are being boosted by fears of water shortages and the rapid increase in assets of sustainable funds known as ESG.
Institutional Investor: The California Public Employees’ Retirement System (CalPERS) has divested from two publicly traded prison companies — CoreCivic and Geo Group.
IPE: A shareholder resolution asking mining company BHP to suspend its membership of trade associations not lobbying in line with the Paris Climate Agreement won just over 22% of the votes at the company’s London AGM yesterday.
Accounting Today: Environmental, social and governance reporting is filled with competing sets of sustainability-related standards that are in need of simplification and consolidation, according to accounting standard-setters and experts.
FinTech Futures: Outlining the actions it will be taking on climate change and green finance with financial institutions (FIs) and other regulators, the FCA says it will engage with and consider the EU’s sustainable finance action plan (SFAP) proposals “particularly around common standards and product disclosures”.
Citywire: Institutional investors in Canada, the United States and the United Kingdom who apply environmental, social and governance (ESG) principles are committing more of their assets to this approach than ever before. Moreover, these investors are adopting an ESG-based approach specifically because they view it as a way to enhance returns and mitigate risk.
Institutional Investors: Despite countless studies, there has never been conclusive evidence that socially responsible screens deliver alpha. A better model exists, argue Harvard Business School luminaries Michael Porter, George Serafeim, and Mark Kramer.
MarketWatch: If you’re wondering whether environmental, social and governance (ESG) investing is taking off, consider this: the term ESG was used during 100% more S&P 500 corporate earnings calls in the second quarter of 2019 compared with the first quarter, according to FactSet.
Institutional Investor: Global institutional investors plan to divest 15.6 per cent of their portfolios from fossil fuels over the next ten years, almost tripling outflows of 5.7 per cent planned for next year, as high-profile activism on climate change gathers pace.
Established in 1991, the Church Pension Fund is responsible for ensuring the pension payments to the employees of the Evangelical Lutheran Church of Finland. As at December 31st, 2018, the Church Pension Fund had US$ 1.6 billion of assets managed mostly by external managers.
The Church Pension Fund has been committed to responsible investing since its launch, becoming a signatory to the UN PRI in 2008. In 2014, the organization adopted Responsible Investment guidelines. Depending on the asset class, External Managers are required to apply norm-based screens to comply with the UN and OECD international norms, negative screens on companies involved in tobacco, alcohol, weapons, adult entertainment and fossil fuel, ESG integration, engagements where possible, and impact investing. Finally, in 2016, the asset owner implemented a Climate Change strategy formalizing its approach to managing the carbon footprint of its portfolios.
Guidelines for Responsible Investing
The Guardian: The world’s three largest money managers have built a combined $300bn fossil fuel investment portfolio using money from people’s private savings and pension contributions. BlackRock, Vanguard and State Street, which together oversee assets worth more than China’s entire GDP, have continued to grow billion-dollar stakes in some of the most carbon-intensive companies since the Paris agreement, financial data shows.
Opalesque: U.S. institutional investors are starting to catch up incorporating ESG factors into investment processes. 42% of U.S. institutional investors incorporated environmental, social, and governance (ESG) factors into their investment decision-making process in 2019.
CNBC: There’s a common perception among investors that putting money into companies that promote sustainability on issues like climate change or corporate governance is “the right thing to do.” New research from the International Monetary Fund (IMF) suggests these investments can also pay off.
Pensions & Investments: San Francisco City & County Employees' Retirement System added 17 names to its list of restricted thermal coal companies as part of its annual ESG review, confirmed Darlene Armanino, executive assistant and board secretary. Of the 17 companies added to the list, four — Foresight Energy, GEO Energy Resources, New Hope Corp. and Yang Quan Coal Industry (Group) Co. — were added because they derive 50% of their revenue from coal.
Top 1000 Funds: Investors should think much more about human capital and the role it plays in their investments, said George Serafeim, the Charles M. Williams Professor of Business Administration at Harvard Business School, speaking at the Fiduciary Investors Symposium at Harvard University.
IPE: The Church of England Pensions Board (CEPB) has criticised influential proxy voting advisers’ stance on climate change-related resolutions ahead of an annual general meeting of mining company BHP in London next week.
Financial News: BlackRock and Amundi, two of the world’s largest investors, have scored poorly when it comes to public disclosure of their greenhouse gas emissions. This is an embarrassing result for the asset management giants, as they are piling pressure on corporations to tackle climate change risks.
Citywire: Proxy voting has become a buzzword in circles of socially responsible investors, it strips out those truly looking to make an impact from the loud supporters of ESG who, in reality, only go as far as excluding a handful of sectors.
Top 1000 Funds: “We take the S in ESG very seriously,” said John Adler, mayor’s trustee and advisor to the other mayoral appointees at New York City’s $200 billion five retirement systems. Speaking at the Fiduciary Investors Symposium at Harvard University, Adler highlighted the critical role investors play in protecting workers’ rights and ensuring a just transition as the global economy adapts to the implications of climate change.
Vision Super is an Australian non-profit industry super fund founded in 1947. The Super Fund manages the pension of over 100,000 members and had AU$ 10 billion of assets under management as at June 30th, 2019.
Vision Super recognizes the importance of integrating sustainability and social responsibility into their investment decision-making. As such, ESG issues are integrated in their different strategies. Furthermore, the Super offers a Sustainable fund that invests in sustainability leaders while avoiding firms involved in controversial weapons. To do so, the Super invests in passive strategies that track low-carbon indexes. Furthermore, Vision Super engages collaboratively with its peers through initiatives such as Climate Action 100+.
IPE: Responsible investment (RI) surged in importance for all types and sizes of institutional investor around the world in the last year, a new survey has found, with the biggest gains in positive sentiment towards the approach recorded among respondents in the UK.
AB+F: Climate campaigners from the financial services industry and the big four banks are ramping up government lobbying. Members of the Australian Finance Initiative (ASFI) are putting the finishing touches to a lecture to be delivered in Canberra later this month. The organisation formed by 130 senior executives from major banks, super funds, insurance companies, academics and regulators is planning to launch a policy roadmap next year.
IPE: The gender pay gap in the UK investment management industry deteriorated from 2017 to 2018 in what was the second worst performance out of 22 business sectors analysed.
Institutional Investor: While many institutions are signing on to agreements to invest more sustainably, there is a discrepancy between the number of institutions signing these agreements and the capital invested in sustainable assets.
The Asset: While European institutions receive many plaudits for proactive initiatives in greening their economies, Asia will eventually be the home of the green financing revolution. The mature economies in Asia with their infrastructure well established are now weaning their populaces away from traditional sources of power such as coal, petroleum, natural gas, hydro, and nuclear power systems.
IPE: Swedish national pension fund AP2 has put “special measures” in place to monitor the external asset managers it uses for Chinese investments, because of the high risk of human rights abuses in China. The Gothenburg-based fund disclosed the approach in its first report about its work on human rights issues.
Citywire: Active asset management is facing serious headwinds and ESG is the best thing to have happened to the industry in decades.
IADB: The Inter-American Development Bank ("IDB") priced a new CAD600 million 5-year fixed rate l Sustainable Development Bond (“SDB”). This transaction represents the IDB’s inaugural SDB issuance, the proceeds of which will be directed to support sustainable development in IDB’s member countries aligned with the Bank’s strategic priorities to reduce poverty and inequalities in Latin America and the Caribbean by promoting economic and social development in a sustainable, climate friendly way.
Institutional Investor: A study has found ESG adoption is rapidly gaining traction among sovereign investors and Central Banks. It showed nearly two thirds (60 per cent) of sovereigns now incorporate a top-down ESG policy – up from 46 per cent in 2017.